New day, new way: Bereft of power to take at will, Tennessee cities will have to sell themselves to grow

New day, new way: Bereft of power to take at will, Tennessee cities will have to sell themselves to grow

April 6th, 2014 by Judy Walton in Local Regional News

Ken Carey lives in Laurel Cove in Hixson, which was one of the last neighborhoods to be forcibly annexed into Chattanooga before the passage of a new bill in the Tennessee Legislature which ends annexation by ordinance.

Photo by Doug Strickland/Times Free Press.

Photo by Laura McNutt/Times Free Press.

TIME LINE

1955: Tennessee adopts first annexation law. Property owners challenging annexation had to prove it would be unhelpful or harmful to prevail.

Early 1970s: Chattanooga doubles its size and brings in 50,000 people, mostly in the Hixson and Brainerd areas.

1974: Amendment to state law shifts burden of proof in annexation challenge. Municipalities now must prove annexation was "reasonable." But cities almost always won in court.

1994: Chattanooga beats Soddy-Daisy in race to annex Falling Water. First of several annexation competitions between Chattanooga and Soddy-Daisy and Chattanooga and Collegedale that lasted into 2001.

1995: Then-Rep. Bobby Wood, R-Harrison, introduces bill to require consent for annexation. Similar bills languished in committee in subsequent years.

1995: Middle Valley residents start drive to incorporate as town to avoid annexation by Chattanooga or Soddy-Daisy.

1995: Then-Mayor Gene Roberts presents plan to more than double the city's 124-square-mile area over 10 years.

1997: Lawmakers throw annexation statute out the window. "Tiny towns" law drops minimum population for municipality from 1,500 to 225, triggering rush by communities and even apartment complexes to incorporate. Tennessee Supreme Court rules statute unconstitutional in November.

1997: Figures show Chattanooga lost population from 1990 to 1996, although Hamilton County as a whole grew by 3.4 percent, almost entirely in the unincorporated county and in outlying towns such as Signal Mountain and Soddy-Daisy.

1998: General Assembly passes Public Chapter 1101, the urban growth law, to take effect July 1, 2001. A study shows that Chattanooga and the county's nine other municipalities could absorb 164,000 new residents within their existing boundaries.

1999: As part of developing its growth plan, Hamilton County proposes allowing property owners to vote whether to be annexed by local cities. The cities refused to agree.

2001: County and municipalities ratify urban growth plan, defining where cities may annex over the next 20 years. Plan includes five-year moratorium on forced annexation.

2003: Chattanooga moves to annex 14 commercial properties in Lookout Valley, Hixson and East Brainerd, and de-annex 1,300 acres along Cash Canyon Road.

2009: Then-Mayor Ron Littlefield in inauguration speech proposes annexing all territory within the city's growth boundary, including areas in East Brainerd, Collegedale, Highway 58, Hixson Pike, Apison and along Lookout Mountain, to include about 6,500 people.

2009: Angry homeowners sue to stop annexation. Littlefield offers to drop effort if county will begin negotiations to consolidate the local governments into one.

2010-2013: Anti-annexation lawsuits fail or are settled and tracts are brought into city. Final neighborhoods join on Dec. 31, 2013.

2011: North Hamilton County residents begin push to form new city, Hamilton, in unincorporated Birchwood, Harrison and Ooltewah.

2013: Rep. Mike Carter and Sen. Bo Watson introduce bill requiring consent or referendum for residential annexation. Bill held over in study committee for summer and 14-month moratorium on involuntary annexation imposed.

March-April 2014: Senate and House pass Carter/Watson bill. Moratorium extended until bill takes effect July 1, 2015.

The last man to be forcibly annexed by Chattanooga is philosophical about his fate.

Ken Carey and his neighbors in Laurel Cove and other north Hixson neighborhoods fought the city's grip for three years, but the end was inevitable. They became Chattanooga citizens Jan. 1.

Now, though, even though it's too late for him, Carey is elated that nobody else can become unwilling prey for Tennessee cities' growth.

He believes a grass-roots struggle by homeowners against a massive annexation push begun in 2009 by then-Mayor Ron Littlefield resonated with state lawmakers, and last week they gave final passage to a bill ending cities' power to annex by ordinance.

"There's some solace to be taken in that," said Carey, an officer in the group Hamilton County Residents Against Annexation.

"If worse comes to worst, we put enough of a highlight on this whole action we feel we contributed to making it better for everybody else."

Presuming Gov. Bill Haslam signs the bill, property owners from here on out will have to consent, by petition or public vote, before cities can absorb them.

The bill overturns 60 years of precedent and a whole theory about how cities grow and thrive.

The classic argument for cities goes like this: As new homes and businesses spring up on their fringes, cities must be able to capture revenue from them to sustain services for their residents as well as suburban folk who commute to work on city streets, visit libraries and museums, eat and shop and take their kids to parks and municipal swimming pools.

From the annexation handbook published in 2007 by the University of Tennessee's Municipal Technical Advisory Service:

"Annexation gives a city some control over its own destiny. ... The failure of a city to extend its corporate boundaries to embrace contiguous areas of growth is an abdication of responsibility."

With no power to grow, that argument goes, city property taxes would rise unsustainably as residents were forced to subsidize the cost of services for those who use the city's amenities but don't live there.

Rep. Mike Carter calls that bunk.

The Ooltewah Republican, who sponsored the House bill that passed Wednesday, said 47 states already allowed annexation only by consent. Among them are the 10 fastest-growing states and the 20 fastest-growing cities, Carter said.

"Cities under referendum do better than cities under ordinance. It changes the way they think. They become more competitive, more consumer oriented," he said.

"We now have to be competitive with other cities -- we have to create services in our cities that people want. We have hit a point where all government, not just cities, must find a better, more efficient way to deliver services."

Sen. Bo Watson, R-Hixson, who sponsored the bill in the Senate, said the law doesn't stop cities from annexing, if they can sell the deal to property owners. He and Carter agreed that pressure from constituents provided the momentum to get the bill passed.

Watson also disagrees with the premise that expansion equals growth.

"The idea that the city's growth has to be lateral -- to increase its geographic footprint -- I don't think that's necessarily a true narrative," Watson said. ".... Cities have multiple models to look at and see what works within their particular situation."

Chattanooga officials agree.

Lacie Stone, spokeswoman for Mayor Andy Berke, said this administration has not adopted Littlefield's announced goal in 2009 to annex all the territory within the city's growth boundary.

She said the goal of the city's economic development department is to maximize the value of the city's assets and services to attract high-quality businesses and their employees to live, work and play here.

Nick Wilkinson, deputy economic development director, and John Bridger, executive director of the Chattanooga-Hamilton County Regional Planning Agency, both said there's plenty of room to grow within the city's existing boundaries.

"I think that will be the task, trying to figure out how to promote good quality development in underdeveloped sites. The advantage there is you've already got the infrastructure in place" such as police, fire and utilities, Bridger said.

Wilkinson added: "From working with companies and their choices in terms of locating to this community or this market, I find that almost always, companies prefer to be within the city of Chattanooga because of the great services and benefits that affords them."

That may be true in larger cities that can offer an array of sophisticated services. Smaller towns may have fewer resources with which to attract new residents and businesses.

The potential impact on economic development is a concern for the Tennessee Municipal League, the lobbying arm for cities, which had managed for years to stave off any restriction on their ability to annex.

League Executive Director Margaret Mahery did not respond to requests for comment, but she said in Nashville last week that "that's been my big issue all along."

Vicki Trapp, president of the Greater Chattanooga Association of Realtors and managing broker for Crye-Leike Realty Co. downtown, said her organization welcomes the law.

"It's going to give people a choice, they can live where they want to live," Trapp said.

A moratorium on involuntary annexation put in place last year will continue until the law takes effect on July 1, 2015.

Meanwhile, Watson and Carter said the Tennessee Advisory Commission on Intergovernmental Relations will study the law's ramifications -- for instance, how could a corporation or commercial enterprise consent to annexation? -- and how it fits with the state's growth boundary law.

That law, passed in 1998 and implemented in 2001, required counties and their cities to agree where cities would grow over the next 20 years. Within those boundaries, cities could annex at will by ordinance. TACIR will study what adjustments will need to be made to reflect the new bill.

Carter said the study will look at whether cities should have to prove they can afford to provide promised services for annexed areas and if there should be a "drop-dead date" for those services to be in place.

Many residents forcibly brought into the city during Mayor Robert Kirk Walker's administration in the early 1970s still haven't received the sewers they were promised.

That's not right, Carter said.

"The plan of services is a contract between government and the people you are annexing. It is not a 'suggestion,'" he said.

Carey, the Laurel Cove homeowner, said the city's been sticking so far to the plan of services it promised, which is supposed to bring sewers within three years.

"Credit where credit is due," he said.

But a homeowner in an East Brainerd neighborhood that was included in Littlefield's annexation plan but never actually brought in said many people in unincorporated areas don't think municipal services are worth their cost in property taxes.

Kyle Holden, president of Hamilton County Residents Against Annexation, said his garbage service costs $50 every three months and fire protection is $200 a year.

"You've got to provide a lot of services to justify [the city property tax]," he said. "There's nothing I feel that I'm missing."

Contact staff writer Judy Walton at jwalton@timesfreepress.com or 423-757-6416.